IV is not a typical patent troll, so the standard patent troll argument is hard to apply. They do not file large numbers of small lawsuits, but rather a small number of very large lawsuits (e.g. against the Intel/Ford/AIG types). They generally do loser pays, and a few other things that make them hard to bucket as a normal patent troll.
IV spends a large amount of money (billions [1]) on purchasing patents. One might reasonably expect that to encourage innovation. As I understand it, most of those patents are not software patents, though (again I am not 100% sure) a large fraction of their lawsuits are based on software patents [citation needed]. One might reasonable expect that to discourage innovation.
An interesting anecdote:
Nest bought IV licenses to defend itself from Honeywell [2]. I would argue that Nest is a relatively decent innovation, so in this (very specific) case, one could argue that IV encouraged innovation.
> IV spends a large amount of money (billions [1]) on purchasing patents. One might reasonably expect that to encourage innovation.
I don't see how purchasing any kind of patents can encourage innovation. Innovation is encouraged by returns from the innovation, not by returns from sold patents. Recycling patents for profit is a completely parasitic business which has nothing to do with innovation.
You found an R&D company, the research goes slower than expected, and after five years you run out of funding. Result of that is: 1) you can sell the partial progress and recoup at least a little cash; versus 2) all your work is worth absolutely zip. If (1) is true rather than (2), you'll be more likely to engage in a risky R&D business in the first place. If (2) is true, you'll focus on something that will yield a sellable product quickly.
This sort of trajectory is not uncommon in industries that have a steep R&D curve. When I worked at an wireless R&D company, we had individual pieces of lab equipment the cost of which would fund a non-trivial web startup to an MVP stage. There are biotech startups that burn through hundreds of millions of dollars without getting to the MVP stage. What the company is left with if it can't build a sellable product before running out of funding is a major concern for these sorts of businesses.
I agree with you, and I don't think patents themselves are the issue. It is the vast number of bad patents that are being approved and used as leverage against those that can't financially defend themselves.
If an R&D firm have spent millions developing (inventing) a new method of transportation, then they should be able to have that method patented. But I'd argue that "swipe to unlock" is not an invention and should definitely not be patented.
The transfer, sale, and collection of patents is fine as far as I'm concerned. That isn't the part that's broken.
Frivolous patent suits are only possible because there are frivolous patents being approved.
The problem is that distinguishing between good patents and bad ones isn't easy and the current statutes don't make it easy. Hence the seeming concensus on HN that patents are more trouble than they're worth. Which is an entirely justifiable viewpoint given the demographic of this site: if you're in the internet sector where capital costs are low and five years might as well be an eternity, then patents are almost certainly more of a hinderence in your industry than a help.
The question is: what about the 90% of the engineering world that's outside that sector? Imagine a hypothetical company trying to do what Google is doing with self-driving cars. Is there a non-IP business model for such a company that doesn't involve "bankroll blue-sky R&D with the massive profits thrown off by your advertising business?"
If you give money to people in exchange for innovation that encourages innovation. That said, purchasing patents only encourages innovation if those patents are the product of innovation.
#1 can be a concern if #2 is too common. I.e. if it's too easy to make junk patents, trading them can become a lucrative parasite business. So some will file tons of junk patents just to sell them to trolls. In such scenario the fact that some are ready to pay for such junk encourages more patent pollution which only harms innovation.
Judging by the current patent system, patents and innovation aren't equal in many cases. On the contrary, patents are often equal to the stifling of innovation. So giving money for patents is not equal to giving money for innovation in general case.
There's also the possibility [1] that their lawsuits prevent companies from free-riding off the innovative ideas by using them without licensing them, thereby increasing the return to innovation. Though obviously if the typical such lawsuit is over obvious ideas or ones independently discovered by the defendants, that would not apply.
[1] not claiming this is the actual case with IV, but it's important to be aware of this mechanism
That is a simplistic argument. What is the difference between a large company with several labs producing 'innovation' and a large company funding several labs to produce 'innovation'?
Those examples have nothing to do with my argument. Both of your examples neglect the crux of my statement. Paying for patents is not the same as funding innovation. Funding innovation may involve paying for patents.
What I stated is that if your company makes its only revenue by the litigation involved with the patents it purchases, it is a parasite. Why? Because it does not produce any goods or services to keep the economy moving.
Of course IV does not only make revenue by litigation, they also make revenue by licensing patents without litigation. If the patent system were not broken this would be a perfectly reasonable business model, funding new inventions and selling the rights to produce them (which of course would require litigation if people produced those inventions without paying). For your argument to be valid you must establish that not only is the current patent system broken, but that it would be fundamentally impossible to have a non-broken patent system.
IV is not a typical patent troll, so the standard patent troll argument is hard to apply. They do not file large numbers of small lawsuits, but rather a small number of very large lawsuits (e.g. against the Intel/Ford/AIG types). They generally do loser pays, and a few other things that make them hard to bucket as a normal patent troll.
IV spends a large amount of money (billions [1]) on purchasing patents. One might reasonably expect that to encourage innovation. As I understand it, most of those patents are not software patents, though (again I am not 100% sure) a large fraction of their lawsuits are based on software patents [citation needed]. One might reasonable expect that to discourage innovation.
An interesting anecdote: Nest bought IV licenses to defend itself from Honeywell [2]. I would argue that Nest is a relatively decent innovation, so in this (very specific) case, one could argue that IV encouraged innovation.
As I said, hard to balance.
[1] http://www.reuters.com/article/2014/04/11/us-microsoft-apple... [2] http://techcrunch.com/2013/09/11/nest-buys-protection-licens...